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Apple Fires Back At Tax Avoidance Accusations

by Jason Gorringe, Tax-News.com, London

08 November 2017


Apple, the world's largest taxpayer, has released a statement seeking to debunk claims in media internationally about its tax payments around the world, following coverage in recent days about it seeking tax mitigation arrangements in Jersey due to international tax changes in Ireland affecting its existing tax arrangements.

The company's November 6, 2017, statement said: "Apple believes every company has a responsibility to pay its taxes, and as the largest taxpayer in the world, Apple pays every dollar it owes in every country around the world. We're proud of the economic contributions we make to the countries and communities where we do business."

Apple underscored that, contrary to media reports:

  • The changes Apple made to its corporate structure in 2015 were specially designed to preserve its tax payments to the United States, not to reduce its taxes anywhere else. No operations or investments were moved from Ireland.
  • Far from being "untouched by the United States," Apple pays billions of dollars in taxes to the US at the statutory 35 percent rate on investment income from its overseas cash.
  • Apple's effective tax rate on foreign earnings is 21 percent – a figure easily calculated from public filings. This rate has been consistent for many years.

Apple's latest statement reiterated the message in an earlier message from October, which said: "The debate over Apple's taxes is not about how much we owe but where we owe it. As the largest taxpayer in the world we've paid over USD35bn in corporate income taxes over the past three years, plus billions of dollars more in property tax, payroll tax, sales tax, and VAT."

"Under the current international tax system, profits are taxed based on where the value is created. The taxes Apple pays to countries around the world are based on that principle. The vast majority of the value in our products is indisputably created in the United States – where we do our design, development, engineering work, and much more – so the majority of our taxes are owed to the US."

"When Ireland changed its tax laws in 2015, we complied by changing the residency of our Irish subsidiaries and we informed Ireland, the European Commission, and the United States. The changes we made did not reduce our tax payments in any country. In fact, our payments to Ireland increased significantly and over the last three years we've paid USD1.5bn in tax there – seven percent of all corporate income taxes paid in that country. Our changes also ensured that our tax obligation to the United States was not reduced."

"We understand that some would like to change the tax system so multinationals' taxes are spread differently across the countries where they operate, and we know that reasonable people can have different views about how this should work in the future. At Apple we follow the laws, and if the system changes we will comply. We strongly support efforts from the global community toward comprehensive international tax reform and a far simpler system, and we will continue to advocate for that."

TAGS: tax | investment | business | European Commission | value added tax (VAT) | sales tax | Ireland | property tax | law | Jersey | payroll | multinationals | transfer pricing | United States | tax reform | Europe | Invest | BEPS

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